Stewart settles with investors, replaces longtime board members

Malcolm S. Morris and Stewart Morris Jr. will resign from the board at Stewart Information Services Corp. as part of settlement agreements with activist investors who said the board composition created conflicts of interest that contributed to the company's underperformance.

The resigning board members are cousins who have served on the board for 16 years of the Houston-based title and real estate services company. They will be replaced with Stewart CEO Matthew Morris and Clifford Press.

Two additional board members will replace Laurie Moore-Moore and Frank Keating, who have agreed to step down. A director search firm has been hired to help find their replacements.

When the new board is in place, eight of its nine directors will be independent, the company said.

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"The enhancements announced today will help us improve Stewart's corporate governance structure for the benefit of all shareholders, allowing us to create a truly independent board in line with best practices," Thomas Apel, board chairman, said in a statement. "We believe the newly constituted Stewart board, which will include substantial industry expertise, diverse perspectives and a wide variety of backgrounds, will help guide the company forward."

The agreements were made with Starboard Value and Foundation Asset Management. Collectively they and their affiliates own 3.6 million shares, or about 15.5 percent, of Stewart's outstanding stock.

Foundation has agreed to abandon its consent solicitation seeking to call a special meeting of Stewart's shareholders.

Press, 63, has served on numerous boards and is currently a director of Newcastle Investment Corp. and Quantum Corp.

Malcolm S. Morris and Stewart Morris Jr., formerly vice chairmen of Stewart's board, previously served as co-CEOs from 2000 to November 2011. They are first cousins, and Malcolm S. Morris is the father of current CEO Matthew Morris.

While the cousins were co-CEOs, stockholders experienced negative returns, and the Morris family collected $45 million "in the form of direct compensation, fees to affiliated companies and family-owned horse expenses," according to documents previously filed by Foundation.

"We are concerned that due to their familial relationships, Malcolm S. Morris and Stewart Morris Jr. are at risk of placing the interests of CEO Matthew W. Morris and other members of the Morris family above those of the company's public stockholders," the filing reads.

Stewart has been the target of a number of activist investors in recent years, leading to it making other changes, including a restructuring of the company's stock.